CRUDE palm oil futures dropped 3.8 per cent to a near 2-week low after sharp falls in China’s stock markets and on fears exports may fall below expectations, traders said yesterday.
Taking a cue from a second steep drop in the Shanghai bourse, benchmark November palm oil futures on the Bursa Malaysia Derivatives Exchange dropped as much as RM91 to RM2,284, a level unseen since Aug. 6.
The market then settled at RM2,299 per tonne.
Policy worries recently made the Shanghai stock market slide a focus of global markets with yesterday’s losses triggering a similar reaction in markets across the rest of Asia and Europe.
Fears in the palm oil market were compounded by market talk that Aug. 1-20 palm oil exports would be 5-10 per cent lower than the same period a month ago that ranged between 875,330 and 913,153 tonnes. Cargo surveyors are due to report Aug. 1-20 data today.
“Palm oil is strong fundamentally because stock levels are still tight but external factors are becoming more of an influence especially what happens in China because China is a buyer of palm oil,” said a trader with a local commodities broker.
Oil fell below US$69 (US$1 = RM3.56) a barrel yesterday as the slide in Chinese markets sent doubts through global markets about the strength of the world economic recovery.
Volume, however, increased to 33,290 lots from 14,888 lots on Tuesday while open interests declined to 83,531 contracts from 84,802 previously. On the physical market, August South declined to RM2,400 per tonne from the RM2,450 per tonnne on Tuesday.
Source : Business Times